U.S. Job Growth Surges; Annual Wage Gain Largest Since 2009

The BLS bumped down its initial estimates of job gains in June and July by a combined 60,000 jobs, though both remained in line with the average over the past year.

Other economists, though, have expected payroll growth to slow as employers increasingly struggle to find available workers now that the jobless rate has dipped below 4%.

July's job gains were revised slightly lower on Friday, showing the economy added 147,000 jobs during the month. But the last time unemployment was this low in the dot-com boom, wage growth was significantly faster - well above 3.5 percent. Gains were led by education and health services at 53,000 jobs, professional and business services with 53,000 and wholesale trade at 22,400.

"The bottom [income] quartile and the bottom decile are moving up faster than everyone else", said Cathy Barrera, chief economist at the job site ZipRecruiter.

Job gains in August were nearly across all sectors, though manufacturing payrolls fell by 3,000. Wages in manufacturing have risen by just 1.8 percent over the past year. Mining added 6,000 new jobs.

Job gains for August topped those for July and June. Still, rising inflation, which also reached 2.9 percent in July from a year earlier, has offset that gain.

Hiring has been strong in almost every industry this year from manufacturing to health care.

The bigger than expected wage numbers may weigh on the stock market Friday as investors are likely to think it will encourage the Federal Reserve to increase the pace of interest rate hikes US stock index futures fell in pre-market trading Friday morning after the release of the jobs report.

Global outplacement firm Challenger, Gray & Christmas said on Thursday there were 521 tariff-related job cuts in August, but these were largely offset by the hiring of 359 workers by steel producers. The average hourly wage in construction was up 3.3 percent over the a year ago, but the gain was 3.5 percent back in September of 2016.

USA businesses added 204,000 jobs while federal, state and local governments lost 3,000. That gauge includes part-time workers who'd prefer a full-time position and people who want a job but aren't actively looking.

Annual wage growth hit a nine-year high in the U.S. last month as the economy created more jobs than expected. With job openings exceeding the number of people seeking work, and with initial jobless claims at their lowest level since 1969, the labor market is still largely in good shape.

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